… What employers can expect
After a one-year transition period, during which the UK continued to observe the legislative status quo, the country left the EU on 31 December 2021. Can we now expect a huge conflagration of statutes which emanated from Brussels? The answer in the short term, and almost in the longer term as well, is no. To understand why that should be, it is necessary to go back to basics.
It is important to remember that since 1 January 1973, when the UK joined the EU, not all of our laws have had their origin in the EU. For example, the Employment Rights Act of 1996 is a prime example of domestic legislation which came onto the statute books without reference to or input from the EU. Although changes could be made to such statutes, it would be through the usual domestic legislative process and would depend on the agenda of the Government of the day.
Another point to remember is that it would be a brave Government indeed which sought to remove what are considered in this country to be fundamental employment rights such as the right not to be unfairly dismissed or the right to refuse to work in unsafe conditions. Similarly, it is impossible to believe that any political party of whatever persuasion would seek to remove or reduce the protection against discrimination on the grounds of, say, sex, race or religion or any of the other protected characteristics.
… UK has agreed to maintain all applicable EU Law!
What, then, is the position in respect of those laws which came via EU Directives which were subsequently transposed into domestic law? Can they now simply be expurgated from the UK statute book? Again, at the risk of being negative, the answer is no. Instead, from 31 December 2020, the UK has agreed to maintain all applicable EU law (the so-called “retained law”) until such time as the UK government decides, via normal legislative processes, to repeal or amend them. Such changes will be made without reference to the EU and will not be subject to the jurisdiction of the European Court of Justice (“ECJ”).
… Any legal changes will need to be in line with the Withdrawal Agreement
There is one caveat however: any amendment or appeal of the retained law which has a material impact on trade or investment may be a breach of the terms of the Withdrawal Agreement. This condition reflects the EU’s demand to have a “level playing field”. In theory any such changes could be met with “balancing measures” by the EU which could be, for example, the imposition of tariffs on certain goods provided always it could be proven that any such changes did have an actual adverse effect on trade or investment. No doubt this could prove to be a fertile source of future disagreement unless both sides can reach a peaceful way of living.
… Key areas identified for change
So, having reviewed the basics, what exactly can we expect to see in the post-Brexit world of employment? There are a number of key areas that are the most likely candidates for change as, for the most part, they have been unpopular with employers, employees or trade unions or they were simply not a comfortable fit with the way workplace relations and legal requirements have developed in the UK. Not all of them came about as a result of EU directives but all are ripe for change and are discussed below.
… Discrimination rights to remain but compensation may be limited
As stated above, none of the basic entitlements in this area will change however there may well be a cap placed on financial awards in successful discrimination claims which are currently uncapped. Such a change would bring discrimination awards more into line with those where unfair dismissal has been found. In that case, the maximum compensation award for financial loss is capped at the lower of £88, 519 or 52 weeks’ pay. If discrimination awards were similarly capped there would still be the possibility of an extra award in respect of injury to feelings which are not awarded in cases of unfair dismissal. Therefore, despite any cap which might be applied to the financial award, the possibility of an injury to feelings award of between £900 and £45,000 still make discrimination cases potentially very costly for the employer.
… Trade union law to be scrutinised potentially leading to more positive outcomes for employees
The current position is that where a company does not recognise a trade union for bargaining purposes, it can be forced to do so in certain circumstances. The Central Arbitration Committee (the “CAC”) can order a company to recognise a trade union where it is satisfied that a majority of the workforce in the bargaining unit belong to that union. Where the position is not that clear, the CAC can arrange for a secret ballot of the workforce in that unit. If trade union recognition is supported by a majority of the workers voting and by at least of 40% of the total bargaining unit (whether they voted or not) recognition will be declared by the CAC. This is a low bar to reach and has been unpopular with companies who prefer to deal with their workforce directly.
In addition, trade union membership has fallen dramatically since its high of 13.2 million in 1979 to 6.35 million in 2019 (the last complete year for which figures are available). Put simply, the trade unions are not the force they were 30 years ago in most sectors particularly in the private sector and among younger employees. The ballot requirements could be increased to make forced trade union recognition more difficult.
Likewise, the right to strike may be subject to further tightening up particularly in the transport sector where strikes in 2019 and 2020 led to widespread hardship and financial losses in the sector. Such strikes, even where legal, have a paralysing effect on a crucial sector of the economy. As the country emerges from the COVID 19 crisis, the need for a dependable transport sector to enable economic recovery will be even more important.
…Working Time Regulations could evolve to suit UK labour practices
These Regulations which came into the UK statute book in 1998 were born in the EU and have, in many respects, fitted uncomfortably in the context of UK labour practices. For example, the Regulations established the requirements for the average working week to be limited to 48 hours. The UK was the only member state which failed to adopt that requirement by allowing employees to opt out. As a result it has become commonplace to offer, indeed encourage, employees to sign opt-out agreements agreeing to work those hours necessary for the performance of their job. Some sectors would have suffered more than others had they adhered to the 48 hours limit. For example, doctors in training found that that rule not only limited their working hours but, as a result, their clinical development as well.
Other provisions of these Regulations have also proven to be difficult for employers, lawyers and even judges to understand and those are the ones relating to holiday, specifically:
• the accrual of holiday during long-term sick leave;
• the right to carry over untaken holiday from one holiday year to the next and
• the calculation of holiday pay which under the Regulations includes not only basic salary or wages but also such things as overtime, commission, tips and other benefits. The most likely change here is that in the future holiday pay will be based on basic salary only.
• a new determination of what is “working time” will most likely exclude travel to and from work for peripatetic employees who travel from place to place during their working day. Travel to their first place and work and from their last place of work would not count as working time.
…Transfers of Undertakings Regulations (“TUPE”) may be due for an overhaul
Yet again, the application of these EU-born regulations has given rise to much litigation some of which has made them even more difficult to understand and apply. A prime example of this has been the limitation of the purchasing company’s (“the transferee”) ability to harmonize the terms and conditions of the transferring employees with those of the company’s existing workforce. The only lawful way to do this has been for the transferee to show that the reason for changing terms and conditions of the workforce in order to harmonise them is an “economic, technical or organisational reason entailing a change in the workforce.” Employment solicitors and judges have spent many hours seeking to determine what such reasons might include. It seems likely that changes to these regulations will facilitate such harmonisation.
The rules on collective consultation in the TUPE context are also ripe for change. The current position is that if there is even one transferring employee, collective consultation must take place. One proposed change would be to align the TUPE consultation requirements with those which apply where 20 or more employees at one establishment are made redundant.
…Agency Workers’ rights could be no more
Another very unpopular piece of EU legislation is the Agency Workers Regulations of 2010. Essentially, these grant agency workers who have worked at least 12 complete weeks for the same business the entitlement to the same terms and conditions as that business’s permanent employees including the same opportunities for promotion and training. It is likely that this legislation will be repealed in its entirety and it is difficult to see how doing so would have a detrimental effect on trade and investment with the EU.
…UK Data Protection will have to withstand EU scrutiny
General data protection principles enshrining the rights of the data subject and the duties of the data holder will remain unchanged. However, new rules governing the transfer of data to non-EEU countries may be required. The EEU countries are the 27 member states of the EU plus Iceland, Liechtenstein and Norway. The UK, not being a member of the EEU, will have to ensure that adequate measures are in place to protect data flowing from the UK to these countries. The existing data protection regime is currently being scrutinised by the European Commission which will determine whether the current UK regime offers sufficient protection.
…Some EU law in the pipeline will still be adopted by the UK
So, those are some areas where the UK will almost certainly diverge from the EU in the realm of labour law. There are, however, other areas where the Government has indicated it would adopt all or parts of certain EU directives which are in the pipeline which are discussed below.
…Protection for UK whistle-blowers set to improve
A new Directive, due to come into force in the EU in December 2021 would require the employer to inform the whistle-blower of any steps it has taken or proposes to take as a result of the information provided by the whistle-blower. In addition, equivalent protection to that afforded to employees who blow the whistle would be extended to self-employed freelancers and shareholders.
…Transparent and Predictable Working Conditions Directive will require further action to prevent the abuse of zero hours contracts
This Directive is due to come onto the EU statute book in April 2022. The UK is already ahead in this area as not only employees but also workers are entitled to written terms and conditions of employment setting out such basic information as the names of the parties, salary and other benefits, working hours, overtime arrangements, holidays etc. However, the Directive would also require a more “stable” and “predictable” contract which would, for example, prevent the abuse of zero hours contracts, require the employer to give reasonable notice of any shift change and to pay compensation to the employee where short notice has been given of a shift cancellation. It would also ban long probationary periods. Although in reality, in this country every employee could be said to be on a two-year probationary period in the sense that an unfair dismissal claim cannot be brought by anyone with less than that length of service.
…Work-Life Balance for Parents and Carers Directive will shore up working parent’s rights
This Directive was passed by the European Parliament on 1 August 2019 and must be adopted by all member states by 1 August 2022. In many ways, UK legislation already provides several of the rights enshrined in the Directive such as paid paternity leave, shared parental leave and rights for carers. UK employees are also entitled in certain defined circumstances to request flexible working, to take time off for family emergencies and to take unpaid parental leave to care for a child under the age of 18. Carers are also protected from discrimination or harassment as a result of their caring responsibilities.
Therefore, only a few changes are envisaged in the area of family-friendly policies although one such change might be the removal of the length of service requirement for an employee wishing to take paternity leave. Currently, the employee must have completed 26 weeks of continuous service before he is entitled to such leave.
… Will the UK be truly free from EU Employment Law?
Overall, it is likely that the Government will proceed with caution in introducing changes in employment law. Although the freedom for the UK to make its own laws was argued to be one of the main advantages of Brexit, nevertheless the UK will need to remain a viable trading partner with the EU. In addition, measures to defeat COVID19 will dominate the legislative agenda for the foreseeable future.FG Solicitors is an expert in helping its clients navigate the everchanging employment law and people management landscape to provide greater certainty over their financial and operational outcomes. Please watch this space for further updates from the employment specialists at FG Solicitors. If you require further advice about the above, please feel free to call us on 0808 172 9322 for a no obligation discussion.
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This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.